Iran's supreme leader spoke not with the thunder of a man regarded in his country as God's representative on Earth, but with the exasperated tone of a corporate manager chastising his employees.

Ali Khamenei had ordered his deputies to start privatizing state-owned businesses: the telephone company, three banks and dozens of small oil and petrochemical enterprises.

Jealously guarding their own sources of power and patronage, however, his underlings all but ignored him.

Months passed. Then Khamenei gathered the country's elite for an extraordinary meeting. President Mahmoud Ahmadinejad and his Cabinet ministers were there, as were important clerics, the leader of parliament and provincial governors, and the heads of state broadcasting and the Iranian chamber of commerce.

With television cameras rolling, Khamenei told them to pass some laws, sell off some businesses -- and be quick about it. "Those who are hostile to these policies are the ones who are going to lose their interests and influence," he declared.

The system shrugged. By November, nine months after his public scolding and almost a year and a half after Khamenei had first issued his order, almost nothing had happened. According to the Middle East Economic Digest, only two out of 240 state-owned businesses Khamenei targeted had been sold off.

For years, Western analysts have struggled to understand the inner workings of Iran's leadership. To many, it is a government tightly controlled by the Shiite Muslim clergy. But the power of the clerics has steadily eroded. Increasingly, power is distributed among combative elites within a delicate system of checks and balances defined by religious as well as civil law, personal relations and the rhythm of bureaucracy.

Iran analysts struggle to discern which officials have authority and how much. And when Iranian officials make public pronouncements, it often is unclear whether they are expressing established policy or fighting among themselves -- speaking for their own faction or just themselves.

Concentric circles of influence and power that emanate from the supreme leader include the clergy, government and military officials -- and at their farthest fringes, militiamen and well-connected bazaar merchants -- altogether perhaps 15% of Iran's 70 million people.

Even the man regarded in Iran as the highest-ranking cleric in Shiite Islam finds himself constrained and challenged.

Those inside Iran's circle of power, says Ali Afshari, an analyst and former student activist now living in Washington, operate according to unique rules.

"It is not a democracy or an absolute totalitarian regime," he said. "Nor is it a communist system or monarchy or dictatorship. It is a mixture."

...Iran's problem is too great a separation of powers. The Ayatollah needs to understand how to elect allies next time around.
Posted by Orrin Judd at December 31, 2007 12:34 PM